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Ingleside Equity Group, LP v. City of ST. Albans

United States District Court, D. Vermont

March 3, 2015

CITY OF ST. ALBANS, Defedants.



Plaintiff Ingleside Equity Group, LP ("Ingleside") brought this suit against the City of St. Albans ("City") because the City refused to grant a water and wastewater allocation to service a parcel of its property in the Town of St. Albans ("Town"). The City denied Ingleside's request on the basis of a 2011 moratorium on new allocations outside of the City limits. The moratorium, however, has an exception for a specific district within the Town referred to as the "sewer district." Ingleside's parcel is located in the Town but outside of that district.

Ingleside initially asserted that 1) the City unlawfully discriminated against Ingleside in violation of Chapter 1 Article 7 of the Vermont Constitution and its equal protection rights under the Fourteenth Amendment, 2) the City's actions amounted to unlawful extraterritorial zoning and were therefore ultra vires, and 3) the City breached its statutory obligations under Title 24. The parties filed cross motions for summary judgment. The Court denied Ingleside's motion for summary judgment and granted summary judgment to the City with respect to Ingleside's state law claims. The Court denied summary judgment with respect to Ingleside's equal protection claim, which is a "class of one claim" requiring Ingleside to prove that the City intentionally treated it differently from others similarly situated and that there is no rational basis for the difference in treatment. ECF No. 35. Ingleside's "class of one" claim is the only claim before the Court.

The Court conducted a bench trial on October 28 and 29, 2014. Based on the testimony of witnesses, all of the evidence submitted, and arguments of counsel, the Court makes the following findings of fact and conclusions of law as required by Rule 52 of the Federal Rules of Civil Procedure. In brief, the Court concludes that Ingleside's property was not similarly situated to the sewer district, that excepting the sewer district from the moratorium was justified by a legitimate governmental policy, and that the City did not intentionally single out Ingleside's parcel in any way. Accordingly, the Court will enter judgment in favor of the Defendant.

I. Findings of Fact

A. Early Projects and Related Litigation

Over a period of several years, Sam Smith and his wife, Rachel Smith, have worked together to help Mr. Smith's[1] parents, Edwin and Avis Smith, develop land that was previously the site of the family's dairy farm.[2] First, the Smiths developed seven residential lots located off of the Thorpe Avenue Extension in 1987. During this process they contacted then City Manager Bill Cioffi and requested water and wastewater allocations, which Mr. Cioffi approved. Mr. Cioffi made clear that the City owned and controlled the lines and that any lines attached to the City's system became City property regardless of whether they were located in the Town or City. Mr. Smith did all of the negotiating with the City on behalf of his parents.

Next in 1987, the Smiths proposed a fourteen-lot development directly to the east of those first seven lots. This project was known as Sunset Terrace. The project triggered Act 250 jurisdiction. As part of the Act 250 application, Mr. Smith once again requested and received a letter from the City approving the hookups for water and wastewater in December of 1987. The Environmental Board approved the application but included a condition stating that prior to any further development or subdivision the Smiths would be required to prepare and submit a conceptual master plan for the rest of the farm.

While Sunset Terrace was in Act 250 proceedings in 1988, the Smiths began developing a retirement community called Grice Brook, a forty-eight unit garden-style condominium project on ten acres. Mr. Smith once again contacted Mr. Cioffi to tell him that he was interested in using City water and wastewater services for this project. Mr. Cioffi told Mr. Smith that this time he would have to present the plan to the St. Albans City Planning Commission even though he had not had to do this previously for either the Thorpe Avenue Extension project or Sunset Terrace. Mr. Smith presented his request for allocations to the Regular Monthly Meeting of the City Planning Commission on August 15, 1988.

Peter Deslauriers, a fellow Town resident who lives on Thorpe Avenue, was a repeat player in the Smiths' interactions with the City. He frequently attempted to thwart their development plans both before and after he eventually became an Alderperson because he was concerned about their effect on his neighborhood.

During the hearing regarding Grice Brook Mr. Deslauriers spearheaded opposition to the project on behalf of himself and others in the neighborhood. Originally Mr. Smith proposed Thorpe Avenue as the point of access to the Grice Brook development. Mr. Deslauriers voiced his and other residents' concern that the development would affect traffic. The meeting was recessed. On August 29, 1988 a Special Meeting of the City Planning Commission was convened. It recommended that the City not allow the Grice Brook project to use Thorpe Avenue. The City Council subsequently denied the Smiths use of the water and wastewater services. The Smiths returned to the City Council with a proposal to construct a new road rather than using Thorpe Avenue to access Grice Brook, which it accepted. On May 18, 1989 the City issued water and wastewater allocations for the Grice Brook project.

The construction of the proposed road triggered the need for the master plan. After several failed attempts, the Smiths presented a plan in 1994 that won agreement from the various agencies involved. The master plan broke the farm into five smaller parcels with different zoning designations: the south parcel (Commercial C zoning district), the west parcel (Commercial C and Residential zoning district), the east parcel (Agricultural/Rural and Recreation/Conservation zoning district), the south central parcel (Commercial C zoning district) and the central parcel (Commercial/Residential and a Commercial zoning district). The south central parcel is the part of the Smiths' property that is at the center of this lawsuit. The City did not assert any objection to the master plan.

During the Act 250 process for Grice Brook and while developing the master plan for the rest of the farm, the Smiths proposed a nine-unit condominium project that was exempted from the master plan with a company called Hanley Lane. The Smiths presented the Hanley Lane project to the City Planning Commission in the spring of 1989. Once again Mr. Deslauriers, now an Alderperson, led opposition to the project, which was in his neighborhood. On August 21, 1989 the City Planning Commission, after holding two meetings, voted not to recommend approval of water and wastewater allocations for the project to the City Council. At the same meeting, the City Planning Commission voted to recommend approval of another project seeking a wastewater allocation proposed by Robert Cioffi, brother to the City Manager at the time.

Many years before the moratorium at issue in this case was enacted, the City Council discussed a different moratorium on allocations in 1989 while the Robert Cioffi project was before it. The Council approved the Robert Cioffi project and then recessed without considering the Hanley Lane project. As a result, Hanley Lane was affected by the 1989 moratorium while the Robert Cioffi project was not. That moratorium was to be in effect until January 1, 1990 and after it was enacted the City denied the Smiths' application for a water and wastewater allocation for the Hanley Lane project. Mr. Deslauriers did not recuse himself.

The Smiths filed a lawsuit against the City in state court claiming that the Board of Alderpersons' denial of their application for the Hanley Lane project was improper because: 1) the denial was an impermissible attempt to impose zoning requirements outside the City, 2) the City was improperly attempting to control land use when it did not have a duly adopted sewer policy, 3) the City acted in a discriminatory manner in allocating wastewater capacity, and 4) that the denial was void because of participation of an alderperson with a conflict of interest.

The Smiths received a favorable ruling on May 17, 1994. The state court held that the City had discriminated against the Smiths by granting the application of a similarly situated applicant, the Robert Cioffi project, while denying their application. The City's expressed reasons did not relate to wastewater capacity concerns, but rather collateral matters including traditional zoning concerns of traffic and housing density. The City's attempt to indirectly zone outside of its borders did not represent a reasonable basis for differentiating the Smiths' project and the Robert Cioffi project. The City Alderpersons, the court held, abused their discretion. The Smiths were granted a wastewater allocation for the Hanley Lane project. However, they ultimately never used it because the owner of Hanley Lane had relocated and was no longer interested in construction in the area.

In light of all the interactions between the Smiths and the City, the Smiths also filed a second lawsuit for damages related to the City's treatment of the Grice Brook project. The Smiths sought a reversal of the City's initial refusal to grant an allocation for the Grice Brook project. On September 23, 1997 the court relied on the same reasoning as the first state court decision and held that the City's denial was improper because it was based on the City's planning and zoning process rather than concerns related to wastewater capacity. The state court awarded damages for the cost of constructing Grice Brook Road, loss of contracts, loss of income, and interest for that period.

B. Infrastructure Construction at Grice Brook

The Grice Brook project went forward in 1995. When the Smiths were ready to hook on to the City lines Mr. Smith contacted Mr. Cioffi, who arranged to have a preconstruction meeting on site. Although the easiest and most direct way to hook up the sewer line for the Grice Brook project would have been to connect to lines that ran along Thorpe Avenue, Mr. Cioffi directed the Smiths to hook on to a manhole that was on Burnell Terrace. The line between the two manholes was in poor condition. Mr. Cioffi wanted the Smiths to reconstruct that line from Burnell Terrace through private residences to Thorpe Avenue. He also wanted them to repair and install a new line to the four private residences. These residences then became new water ...

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